SWOT ANALYSIS OF JC PENNEY

7/14/2020 Analysis | Passport

https://www-portal-euromonitor-com.proxy.lib.pdx.edu/portal/analysis/blogindex 1/2

J.C. Penney Making an Ambitious Play for Major

Appliances Opinion | 10 May 2016

US department stores retailer J.C. Penney made a

major splash on Monday, 9 May 2016, when it

announced that it would be expanding its major

appliances offerings to nearly 500 stores in the US

and would be offering the products on jcp.com after

a trial in February. The new department, which

features a dedicated appliance showroom of products from LG, Samsung, GE, and Hotpoint, is

expected to begin its expansion in July 2016 and continue into the fall. The announcement by

J.C. Penney signals the retailer’s first attempt in more than 30 years to try and make a dent in the

US$38 billion major appliance market. J.C. Penney clearly feels that expanding the programme

beyond its 22 test markets will yield positive results. The move is a gamble, but one that could

pay off handsomely as it signals the first in a series of efforts to present a unified home

department that can bolster both online and brick-and-mortar sales down the line.

Source: “JC Penney” by Sam Howzit, licensed under CC By 2.0

J.C. Penney entering a competitive market

US major appliances saw volume sales grow 4% in 2015 as more than 60 million units were sold

through retail channels. J.C. Penney enters a market that has seen department stores’ once

dominant share of sales displaced by non-grocery specialists and internet retailing. Home and

garden specialist retailers such as Lowe’s and The Home Depot made up 34% of volume sales

for major appliances in 2015, the largest of any channel. On the other hand, the share held by

department stores has fallen to just 14% of volume sales in 2015, down from 23% in 2005. Newly

installed CEO Marvin Ellison – who has led J.C. Penney since August 2015 – is well positioned to

helm the company’s foray into appliances, drawing on his experience as an executive with The

Home Depot, now one of the largest retailers of major appliances in the US.

The move to sell major appliances will pit J.C. Penney in a more head-to-head battle with Sears,

the historic US leader in major appliances sales. The two department stores have long served as

dual anchors for many malls throughout the US. Entering the major appliances market will

provide J.C. Penney with an additional avenue to draw consumer traffic from its struggling

competitor. While J.C. Penney has managed to turn sales around in recent years, Sears has

continued to flounder, losing sales to competitors and closing stores as it attempts to stave off

further losses.

Appliances expansion only one part of the strategy

The major appliances market is only one component of J.C. Penney’s attempt to revitalize sales

in its home department. The retailer also announced initiatives in window covering, home

furnishings, and floorcovering. These announcements include a pilot programme with Ashley

Furniture – the leading home furnishings brand in the US by retail value – to sell its Signature

Design collection. Through these initiatives, J.C. Penney hopes to present a more unified home

department that can drive additional traffic and capitalise on expected growth in the US housing

market – which is forecasted to help push home and garden sales up by 10% in constant value

by 2020.

New home strategy complements broader initiatives

Search by keyword GOALL

Ryan Tuttle

Consultant - Services &

Payments

7/14/2020 Analysis | Passport

https://www-portal-euromonitor-com.proxy.lib.pdx.edu/portal/analysis/blogindex 2/2

The growing presence of big ticket home items in a showroom setting integrates well with recent

company initiatives to modernize the face of J.C. Penney through investments in omnichannel

retailing and customer loyalty. Providing appliances for sales both online and in stores should

help drive additional traffic to the retailer, while J.C. Penney’s store card and co-branded

personal credit card should benefit as consumers seek financing for larger purchases. While it

remains to be seen if J.C. Penney’s push into major appliances will help it drive sales higher, the

retailer’s decision to expand the programme after a successful pilot does suggest that

management feels that it can use home department as a springboard to help the brand continue

to regain its lost strength.

For further insight, please contact Ryan Tuttle, Research Analyst, at:

[email protected], you can follow him on Twitter @rltEMI.

© 2020 Euromonitor is privately owned & trademarked